Canada Finance Minis­ter’s Statement

Author: | Published: 5 Sep 2017
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I believe that when the economy works for the middle class, it works for everyone. Our government has taken action to support the middle class and to ensure that economic growth benefits all Canadians. We continue to use our strong fiscal position to invest in infrastructure, skills and training, and to protect the environment. And, together with provincial governments, we strengthened the Canada Pension Plan to increase the maximum benefit by about 50% over time and help people retire with dignity.

Crucial to ensuring growth that works for the middle class and supports equality of opportunity is maintaining a world-class financial system that is safe, stable and competitive – with a supervisory and regulatory framework that safeguards institutions and pushes them to operate with the well-being of depositors, creditors and mortgage holders at top of mind.

A long period of low interest rates has increased the burden of household debt. Our government has taken a series of measured actions to strengthen underwriting standards for insured mortgages and to address pockets of housing risk in certain markets.

We continue to monitor the housing sector to ensure that it remains stable and resilient to shocks, and are prepared to take further action if required.

We will not be complacent when it comes to the economic fortunes of middle-class families, and to the most important investment that most people will ever make.

In Canada, we believe that supervision is just as crucial as regulation.

This is at the core of the 'principles-based' approach to supervision followed by the Office of the Superintendent of Financial Institutions (OSFI). By setting principles rather than just rules, the onus is on the institution to understand the risks it faces, to be proactive in managing them and to provide evidence to supervisors of how they are doing this. This approach gives OSFI the flexibility to adapt its expectations of institutions to reflect changes in risk, as institutions adapt to competition, technological innovation and consumer behaviour.

This approach to supervision complements legislative standards and strict rules all financial institutions must meet. The aim is to rein in excessive risk-taking, while allowing financial institutions to take the reasonable risks that are fundamental to the functioning of the Canadian financial system and economy.

In line with international commitments, we have implemented legislative amendments to bolster the toolkit for managing the resolution of Canada's largest banks so that, in the highly unlikely event of a failure, taxpayers are not on the hook to cover losses. We are also strengthening oversight of financial market infrastructures that have the potential to pose systemic or payments system risk.

And to ensure that our legislative framework continues to support a stable, efficient and useful financial sector, we are in the midst of a review to inform how the framework might change as we work to renew it by March 29 2019.

All of these measures are designed to make sure that the financial system and the economy work for all Canadians.




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